Two big casino groups vying for control of rival Echo Entertainment have been buoyed by a regulatory decision in Australia allowing a fund manager to increase its stake in the company.
Perpetual has secured approval to lift its holding in Echo to 15 percent, more than the 10 percent stakes now owned by casino magnate James Packer’s Crown Limited and Malaysian resort giant Genting Group.
Analysts said Perpetual was not likely to act on the approval, but the decision by the New South Wales Independent Liquor and Gaming Authority to lift Echo’s legal threshold for ownership is a win for Crown and Genting, which have applied to the authority to increase their holdings. Crown has said it wants to buy up to 25 percent of Echo.
The move intensified speculation on whether Genting is acting alone or in concert with Crown in stalking Echo, which owns Sydney’s only casino, the Star, and casinos in Brisbane, Townsville and Gold Coast in the Australian state of Queensland.
Echo offers Packer, who wants a casino next to Sydney Harbor, and Genting, the only large Asian casino operator without a stake in Macau, the chance to profit from a surge in Chinese gamblers through Echo’s casino monopoly in Australia’s largest city and No. 1 tourism destination.
If the two join forces, Genting might then get a foothold in Macau through Packer’s partnership stake in Melco Crown Entertainment, which operates two casinos in the booming Chinese gambling enclave. Genting also owns one of Singapore’s two large-scale resort casinos.
They could also end up controlling Echo for a lot less money than an outright takeover would cost. Crown may bid as much as A$5 a share for the company, analysts said. An offer at that level would value Echo at 13 times estimated EBITDA, making it the priciest casino takeover since 2006, according to data compiled by Bloomberg.